[Leanan]

The high oil costs are finally starting to affect the economy:

http://news.ft.com/cms/s/abdd59da-e6b2- ... 511c8.html

Transportation:

$this->bbcode_second_pass_quote('', 'F')edEx, for example, the US delivery group that has been a leading beneficiary of booming global trade, broke its winning streak by warning that this quarter's earnings would be hit by jet fuel costs despite an automatic surcharge for customers.

[MD]

It has been pinching for some time. Just ask your wallet what it thinks about the fake CPI that was put into place a few years back...2% inflation my ass.....

[gnm]

Well of course the CPI doesn't include fuel or food - since those are not common items used by consumers...


-G

[RonMN]

I was complaining a month ago that a "usual" grocery run that had always cost me $70 - $80 had now cost me $139

Well, 2 days ago i didn't even do a "usual" run...it was just for a few odd's & ends (2 paper grocery bags) and it came to $106.

what's got me even more concerned is my gas bill (at this time of year it's only used for my hot water heater) is $22...it should be $5 - $7

That should translate into $1000 a month to heat my home this winter

[tmazanec1]

My last grocery bill included a few "long-term" items. It was twice the usual. I expected it to go up, but not by that much!

[Leanan]

Have you seen this article?

http://www.financialsense.com/stormwatch/2005/0624.html

It's called "The Core Rate." It's all about how the CPI is manipulated. It's kept artificially low so the government doesn't have to pay COLAs.

[Bas]

in the Euro-zone where I live there doesn't seem to be any signals of inflation just yet....

[thor]

$this->bbcode_second_pass_quote('bas', 'i')n the Euro-zone where I live there doesn't seem to be any signals of inflation just yet....

[Barbara]

I'm pretty sure those Euro TPTB are keeping some little dirty secrets and manipulating some data too...

[DantesPeak]

How has the US coped with the energy price shockwave so far? By sucking savings from the rest of the world faster and faster, or in other words by an increase in the current account deficit. [The current account deficit, is generally defined at the amount of money needed to finance the trade deficit plus net interest/dividend payments on international investments and debt.]

Over the period that saw an increase in the price of oil from about $30 to about $50, from the fourth quarter of 2003 to the first quarter of 2005, the current account expanded by $200 billion per year. This is roughly equal to economy wide cost increase in energy, also about $200 billion. Not surprisingly, countries that couldn't compensate by also increasing their current account deficit saw their economic growth slow as real - energy inflation adjusted - income dropped. Then why doed China still have a strong economy? Because it has been printing up fiat money at about a rate of $150 billion a year vs. a much, much lower amount two years ago. Usually large issues of fiat will cause domestic inflation. But in China's case, by pegging to the dollar, China's inflationary policies instead have been hidden and directed to the US dollar - causing inflation in those things quoted in dollars. So it is basically just China and the US that have outrun the energy price shockwave so far.

Will these monetary and trade policies succeed in maintaining economic growth for the US as oil goes to $60, $70, or even higher? There are three main reasons why they won't. First, as the price rises past $60, the price of energy is rising faster than economic systems can smoothly cope with. Distortions in the financial system creates waves of instability in market and industry segments. If these waves cause a number of smaller economic problems, and these problems eventually converge like harmonic waves combining in the ocean to create a huge rogue wave, unexpected events such as the sudden collapse of the dollar or stock market could occur with almost no warning. Second, the US is close to reaching an absolute limit of total world savings available each year. This limit may be about $1 trillion and the current account deficit is probably about $850 billion per year now. Yet there are also other countries running current account deficits too competing for the remainder of that pool. We now may be very close the maximum practical limit which the US current account deficit could possibly reach. But there is an additional factor the US has to worry about. Third, the Fed may have taken into consideration at its last (June 30) FOMC meeting the hyperinflationary tendencies of Chinese monetary policy. The Chinese have been able to outbid other countries for commodities by issuing fiat money, buying dollars with that fiat, and then buying goods with those dollars. This slowly but eventually leads to general inflation, which spreads to all dollar based goods, services, and assets. This inflation causes further declines in disposable income. So unless the current account deficit expands more, which basically is another way of saying foreigners will lend the US more money to maintain a certain standard of living, inflation adjusted spending must drop.

Rising energy prices combined with any or all of the three factors above indicate that the not only will the US economy will no longer be able to sustain growth with oil about $60 - but that unstable and negative market conditions could soon develop.


For more on the inflationary risks to the world economy China has created, see what Alan Greenspan and Treasury Secretary Snow recently said:


$this->bbcode_second_pass_quote('', 'W')hile the presumption that a revaluation of the RMB will notably increase jobs in the United States by constraining imports or expanding exports is without statistical or analytical support, it is nonetheless the case that a more flexible RMB would be helpful to China's economic stability and, hence, to world and U.S. economic growth. Rapid accumulation of foreign, largely dollar, reserve holdings by the People's Bank of China, China's central bank, as a consequence of support for the RMB could boost the growth of the money stock, with the accompanying risk of triggering upward pressure on inflation and a general overheating of the Chinese economy.

The Chinese central bank's issuance of liquidity management bonds to lessen potential increases in the money supply created by foreign asset accumulation has accelerated since regular issuance began in April 2003. Nonetheless, only about one-half of the increase in reserves over the past two years has been offset, with the remainder showing through as money growth.

[BabyPeanut]

July 4, 2004 heating oil was't even $1.10 a gallon. 365 days later it's touching $1.80.


Normally this time of year the price is low and companies that sell to residential users are buying.

Some people do use heating oil all the time.
NorthJersey News link
$this->bbcode_second_pass_quote('', 'Q')ueiruga, the general manager of La Esperanza bakery in Englewood, sees higher fuel costs cutting directly into his bottom line.

"For small businesses like me, these rising prices are very difficult to handle," Queiruga said.

He takes a double hit. He needs 400 to 500 gallons of heating oil each week to run his ovens. "My last [fuel oil] bill came in, and I had to pay $13,000," Queiruga said. That compares with average bills of $6,000 to $7,000.

...

The same can be said for oil-heat customers, who often fill their tanks in the summer because prices are usually lower then, said Bruce Brotherston, sales manager at Shotmeyer Bros. Fuel Corp. in Hawthorne.

This year, however, prices are high and dealers are uncertain what to quote in drawing up budget plans for their customers.

"This is a dangerous time to do that," Brotherston said. "We don't know where the market is going to go; the industry can't predict.

On Monday, Shotmeyer was selling heating oil for less than many dealers in the region - $2.09 a gallon, with a 10-cent-a-gallon discount on a COD purchase - but the company still doesn't know what it will charge 24 hours later.

"It's out of our control," Brotherston said. "We wait with bated breath every night wondering what we're going to pay the next day."

[pilferage]

$this->bbcode_second_pass_quote('BabyPeanut', 'M')any residences take 400 - 500 gallons of heating oil to weather the entire winter. What will Christmas bring for them?

[MD]

I find it very hard to believe that oil prices won't fuel inflation in a big way. It just doesn't make sense as oil price seems to affect everything.
Oh well, I hope the economists are right.

[jaws]

$this->bbcode_second_pass_quote('DantesPeak', 'F')or more on the inflationary risks to the world economy China has created, see what Alan Greenspan and Treasury Secretary Snow recently said:

[DantesPeak]

$this->bbcode_second_pass_quote('jaws', '')$this->bbcode_second_pass_quote('DantesPeak', 'F')or more on the inflationary risks to the world economy China has created, see what Alan Greenspan and Treasury Secretary Snow recently said:

[Leanan]

$this->bbcode_second_pass_quote('', 'J')uly 4, 2004 heating oil was't even $1.10 a gallon. 365 days later it's touching $1.80.

[savethehumans]

Gonna be a long, cold, EXPENSIVE winter, yes.

Latest from the Grocery Store Price Index (a true measure of the across-the-board economic "pinch" of PO):

For some time now, a box of store brand hamburger helper (or tuna helper) has been $1.18.

Sunday, the price notice was "SPECIAL! 4/$5.00!" Which sounds great--until you divide by 4 and realize that a box now costs $1.25!
Translation: they've raised the price 7 cents, but covered that little fact up by pretending to have a SALE!!

And sheeple all over the country are buying this crap, on every level!